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TMI Blog2008 (9) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue and the respondent-assessee in the following circumstances. 2. The facts, as briefly stated by the Tribunal, are that the assessee, viz., M/s. Reliance Industries Ltd. ("RIL" for short) distributed free food/meal coupons as per companies policy to its employees for purchase of meal. For this purpose, the assessee-company had entered into an agreement with M/s. Accor Radha Krishna Services Pvt. Ltd. ("the Accor" for short). The employees at Hazira, Surat were provided with coupons of "Accor" of Rs. 1,300 per month at the rate of Rs. 50 per day. The total amount paid by the assessee-company to "Accor" under the agreement for the meal coupon for the period April, 2003, to March 31, 2004, was Rs. 3.12 crores. The assessee-company claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisite within the meaning of section 17(2) of the Act for being taxed under the head "Salaries", but the amount had to be reduced if any amount against such expenditure incurred by the employer was recovered from the employee concerned. That the proviso under the said clause (iii) of sub-rule (7) of rule 3 provided for an exception but the respondent-assessee was not entitled to claim the benefit of the proviso because, according to the Assessing Officer, the coupons had been misused by some of the employees. The Assessing Officer, therefore, estimated certain amount as being taxable perquisite in the hands of the employees and initiated proceedings under sections 201, 201(1A) and 271C the Act for such violation and for this purpose worked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has come on record. The findings in this relation have been recorded by the Tribunal in paragraph No. 18 of its order. 7. The second issue relates to applicability or otherwise of non-deduction of tax at source on payment made to the employees by way of reimbursement of conveyance expenses which, according to the Assessing Officer, was a taxable perquisite as the relevant conditions stipulated by the Explanation below section 17(2) (iii) (c) of the Act are violated. According to the Assessing Officer, such reimbursement was required to be included in the taxable perquisite for computing the income taxable under the head "Salaries" in the hands of the employees and the employer-assessee having failed to deduct tax at source was liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and on facts in holding that reimbursement of conveyance allowance paid by the assessee was tax free perquisite and, therefore, the assessee was not required to deduct TDS in this behalf?" 12. In so far as the first issue is concerned, the relevant proviso under rule 3(7)(iii) of the Rules reads as under: "Provided that nothing contained in this sub-rule shall apply to free meals provided by the employer during office hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints if the value thereof in either case is up to Rs. 50 per meal or to tea or snacks provided during office hours or to free meals during working hours provided in a remote area or an offshore install ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellate authorities that assessee had acted bona fide were to be accepted yet for the second period, covering December, 2003, to March, 2004, the assessee became liable as the assessee could not thereafter claim any bona fides. 16. The said contention proceeds on a misconception as to the relevant provisions stipulated by the rule in question. The assessee at the time of issuance of coupons cannot envisage as to which of the employees would misuse the coupons because the liability to deduct tax at source is co-related with the taxability of the amount in the hands of a particular employee and there can be no case of estimation on percentage basis. The primary liability to offer the amount for tax is that of the employee concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision, therefore, envisages that the expenditure is in relation to use of any vehicle provided by the employer. There is no qualification as to the nature of the vehicle or as to ownership of the vehicle. In fact, the Assessing Officer also accepts that if the vehicle is owned by the employer or hired by the employer the amount of expenditure cannot be treated as perquisite in hands of the employee. Once this is the position it is not possible to read any further prohibition as the Revenue wants, namely, if the vehicle is owned by the employee the expenditure is not allowable and has to be taxed as perquisite in hands of the employee. 19. Both the appellate authorities, namely, the Commissioner (Appeals) and the Tribunal have rightly read ..... X X X X Extracts X X X X X X X X Extracts X X X X
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